.: Capitalism and Socialism in Japan and the United States | 2004-02-02 12:03AM :.

NOTE: This article uses (or misuses, some might say) the word "socialism" to mean "redistributing wealth in pursuit of social policy goals", rather than "social ownership of the means of production". The usual caveat about old articles applies: it doesn't exactly represent my current views. If I had to write the article again, I would tone down the rhetoric and perhaps address special cases such as support for those who are unable (due to disability) to contribute to society, but I think the overall point relating to direct and indirect subsidies still applies.

While I'm generally a staunch supporter of capitalism, opposing socialism where it rears its ugly head, I have to say that I think Japan is an example of socialism done well, though they're certainly far from being what I'd call a socialist country. And that admittedly, the United States is increasingly an example of socialism AND capitalism done poorly.

I'll begin by giving a disclaimer or two. I try to educate myself about what happens in Japan, but I do lack quite a bit of knowledge about the inner workings of a lot of Japan's social systems, relying on answers to questions I've asked of Japanese and what I can infer from reading Japanese news. Also, there are many other differences between the US and Japan that affect our respective societies and economies, besides the ones discussed here.

First, capitalism. Capitalism, done right, promotes the free flow of new ideas, goods, and services, creating a dynamic society in which that very flow of services between members helps propel the society to ever-higher levels of abundance, affluence, and happiness. Capitalism can be practiced on any scale -- from the ten year old kid that finds and buys an old wagon for a couple dollars, sands the rust off, paints it, straightens out the wheels, and sells it for ten times what he bought it for, to large companies providing new goods and services to thousands of people. It's the whole attitude of filling a gap wherever you see it, taking something in poor condition and leaving it better than you found it, that makes capitalism such a strong, robust system.

For best effect, ideally, every man and woman should be engaging in capitalism. The free flow of new goods and services between people at all levels of society preserves the balance of power and wealth, ensuring happiness and a good life for as many people as possible. The primary danger in a capitalist system is that the capital will become concentrated in the hands of too few. When only a few members of the society are engaging in capitalism and commerce, the entire feedback effect breaks down. The benefits of capitalism would be felt by fewer and fewer members of that society, creating an increasingly large rift that only further prevents more people from engaging and competing in the capitalist system.

You can see it in America today. Most people work not to become wealthy, but simply to get by. Very few people have the attitude of improving society by explicitly engaging in the generation of new goods and services. Most people these days simply work, selling off their natural resources (their time and energy), until they get old enough to start getting their Social Security check. And often that's not enough, so they work until they die, just to "get by". Capital is becoming too concentrated in the hands of the few. Less and less people have a chance of competing against the megacorporations. It's a downward spiral. And I honestly don't know how it will end.

And now, socialism. My general take on socialism is that it is counter-productive, reducing the overall incentive to generate wealth by taking money from those good at creating wealth and giving it to those who are not. This may seem to be in direct opposition to what I said earlier about capital needing to be in the hands of the many for capitalism to work at its best, but there is a difference. I think that, done right, socialism may even complement capitalism, buffering against some of humanity's negative tendencies that cause capitalist systems to fail. Done poorly, however, it's simply a drag on society and the economy, reducing the incentives for everyone to generate wealth.

There are a number of contrasts between American socialism and Japanese socialism. First of all, American socialism subsidises people's needs directly, whereas Japan's subsidises people's needs indirectly. Of course, America also has indirect subsidies, but their effectiveness is greatly reduced by the existence of so many direct subsidies. To illustrate, the Japanese government pays money to ensure that their education, transportation, public safety, health care (I'm not sure of the level of subsidisation here), and other support systems are top-notch. And they are -- they're the most efficient systems in the world. However, these alone do not clothe and feed people. The Japanese people can take advantage of these support systems, but still need to generate wealth, or at least work, to survive. People who are able to work, but don't, are not tolerated. Thus, everyone develops a sense of needing to contribute to society. And the more they put in, the more they get back. I believe this to be an example of an effective blend of socialism and capitalism.

By contrast, America subsidises people's direct needs -- food, money, and shelter. This reduces the incentive to contribute to society, because humans are fundamentally lazy. More and more people will want to jump on the easy-street bandwagon, and not working will come to be more common and accepted in society. (Though of course, those who do work will always feel contempt for the freeloaders.) The burden of supporting those who will not work will only increase over time, forcing even more people to accept handouts as a way of life. Some people may be able to dip their hand into the honey pot just long enough to get on their feet and support themselves, but there will be multitudes of people who get hooked on the lifestyle of having their needs satiated by others. Furthermore, this attitude effectively removes those people from the ideal, dynamic, capitalist society. They say necessity is the mother of all invention, and who would want to do the work of generating new services, strengthening society, when all their basic necessities are already taken care of?

Another facet to the differing targets of Japanese and American socialism is that Japanese socialism helps all people in society, whereas American socialism helps only a portion of the people -- those least likely to contribute anything useful anyway. This is directly related to the fact that Japanese socialism helps people indirectly while American socialism helps people directly. Everybody in Japan goes to school. Everybody uses public transportation. And everyone benefits from the near-absolute safety that can be found there. Money is taken from everybody and goods are given back to everybody in return. This destroys my primary objection to socialism in the first place -- that it's an unfair and direct transfer of wealth from those who generate the most wealth to those who generate the least, with little or no hope for it turning into a net gain for society. In Japan there are small stores everywhere, owned by individuals and families, but not so many big stores. Everybody engages in capitalism. And I think this is due, at least in part, to the indirect socialism that helps ensure a base level of education and competence for everyone without removing the incentive to generate wealth.

Unfortunately for Japan, the Japanese seem to have an unhealthy desire for Western culture and ideas. They take it all in, too, without as much thought as I think it should deserve. They want to have the same number of holidays, the same clothes, hairstyles, attitudes and independence. Personally, I think they watch too much Western TV. The tight cohesion between members of Japanese society has done them a lot of good, I think, and they should be wary of breaking it down so quickly. The older Japanese are in fact wary, and are using their remaining time trying to keep Japan true to her old ways, but the youth truly control the future, and the youth are in love with the West. It's saddening to read about the youth throwing off traditions that have been in place over hundreds or a thousand years, and in such a short time, or showing ever-increasing levels of disrespect and disregard for others, because they want so much to be rebellious and independent, like the Americans they admire on TV.

I read recently that Japan is going to try to privatize the education system, cutting off the flow of government funds and trying out an American-style system. I hope it works out well for them, because if there's one thing you don't screw up, it's education. That holds doubly true for Japan, whose only real natural resource is its people.

Anyway, I don't know where this is all going. If I could tell, I'd quit my job and play the stock market. But I do know that some form of civilization has been around for tens of thousands of years at least, and we still haven't gotten it right yet. So it's good to think about.